Australia's subnational governments are in the process of developing a national carbon trading scheme, despite Commonwealth Government opposition to domestic emissions trading. Through the proposed National Emissions Trading Scheme (NETS), the states and territories are attempting to implement a globally--orientated, internationally significant policy, in spite of Canberra's traditional monopoly on foreign relations and the centralisation of political power, characteristic of Australian federalism. Through the NETS, the state and territory governments have collectively rejected the Commonwealth's authority on an issue of external affairs, undertaking development of a policy of national scope and significance without Federal Government participation. While it is premature to predict the end of collaborative federalism, the NETS highlights the policy flexibility and capacity for intergovernmental conflict inherent in Australian federalism.
Global efforts to mitigate climate change have focused on the Kyoto Protocol, which provides legally binding greenhouse emissions reduction targets for industrialised nations. (1) The Australian Commonwealth Government, however, has refused to participate in the agreement, arguing that it would damage the nation's economy, while failing to significantly reduce global emissions. (2) Instead, despite considerable support for ratification from the public, business groups, and civil society, the Commonwealth has limited itself to a range of voluntary, low cost and 'no regrets' measures, which have been subject to severe international criticism. (3)
In response, Australia's state and territory governments have developed independent greenhouse strategies, often in opposition to Commonwealth policy. Currently, subnational governments are working to establish a collaborative domestic carbon trading scheme, which would impose greenhouse gas emission limits on the stationary energy industry. The National Emissions Trading Scheme (NETS) has been framed in largely economic terms, particularly as an attempt to manage the costs and structural adjustment issues associated with Australia's eventual entry into the global carbon market. The Commonwealth Government has not participated in debate over domestic emissions trading, waiting, instead, for a legally-binding global framework. Differences in national and subnational policy agendas mean that movement towards development and implementation of the NETS has the potential to affect Australian intergovernmental relations in interesting ways.
The concurrent nature of Australian federalism, where legislative and regulatory powers overlap, rather than being clearly divided between the various governments, has long complicated intergovernmental relations. Foreign relations has traditionally remained under Commonwealth control however, because the Federal Government is granted authority over external affairs in section 51 (xxix) of the Australian Constitution. In general, this has meant that inherently global issues, like climate change, have necessitated a national response, coordinated and controlled largely by the Federal Government.
Globalising processes, however, are complicating intergovernmental relations in federal systems. In particular, the liberalisation of trade and financial markets has aided the erosion of traditional distinctions between domestic and external affairs, encouraging subnational governments to assume an international presence and participate in the world economy. (4) In addition, the ability of the nation--state to mediate relationships between non--central governments and the global economy has weakened, meaning that subnational governments must operate within transnational regimes, and the global economy, as well as inside the nation--state. (5) As a result, it is possible to consider Australian states and territories increasingly autonomous global actors, with political and economic goals independent of the Commonwealth. …